Norwich Union is warning company owners and directors they could be losing
out if they continue to keep their pension and business planning separate.
Research from NU shows that while the majority of owners and directors of
small to medium-sized companies have made provision for their retirement,
only 1 per cent have done so through a director pension arrangement.
NU says IFAs should offer this service to clients as the arrangement has
the added benefit over personal pensions of providing a means of raising
funds for the business as well as investing for retirement.
The research reveals a gap in the market where busi ness premises are
concerned. It shows 48 per cent of respondents either owned business
premises outright or through a mortgage or loan while 49 per cent leased.
Pensions marketing manager Iain Oliver says these purchases could be
financed more efficiently if the premises were bought through a director's
He says if the pension scheme buys the business premises, it can lease the
premises back to the company. Any rent paid by the company must be invested
back into the pension, reducing the corporation tax liability while at the
same time boosting the value of the pension.
If the company already owns the premises, it can sell it back to the
pension fund, releasing capital.
If the business experiences difficulties, the premises would be protected
from any creditors because they are an asset of the pension scheme and not
of the business.
Oliver says: “By integrating clients' pension and business financial
planning, IFAs can help them increase their pension provision and provide
greater tax efficiency and protection for the business.”